Peter Cullen, Partner at Cullen – The Employment Law Firm, discusses the proposed Fair Pay Agreements and whether a balance might be struck between providing freedom and flexibility around how work is done and, protecting vulnerable workers from exploitation. The Government is considering the Fair Pay Agreement Working Group report.

The way people work has changed radically since the Industrial Revolution. Changes in working patterns lead to legislative changes in order to keep up with the times.

Back in January, it was reported the National Party had leaked the Working Group on Fair Pay Agreements’ recommendations. Fair Pay Agreements would set minimum pay and conditions for select industries. If the recommendations do result in legislative change they will be likely to mostly affect casual and low-paid workers.

Traditionally, people have wanted the security of full-time, paid employment but the trend is changing and more people prefer to work as independent contractors, licensees, or casual employees.

How do you provide freedom and flexibility around how work is carried out, while also protecting the most vulnerable from exploitation? Some employers may even label permanent employees as contractors or casuals in an attempt to reduce employees’ entitlements.

Coalgate Tavern in Canterbury was recently ordered to pay a penalty of $30,000 for treating its staff as casual employees and not providing annual holidays, sick leave, or bereavement leave.

The operators of the tavern contended that they believed the employees were casual workers and they benefited from being treated as casuals because they were able to work flexible shifts.

The Employment Relations Authority determined that the employees were permanent part-time workers and ordered the operators to pay a penalty of $30,000 for 30 breaches of the Holidays Act.

On the other hand, many hotels and restaurants will genuinely have a pool of casual workers who are only offered work sporadically when there is an influx of business, such as a race day, or in Wellington, WOW or the International Festival of the Arts. The situation of workers who are called “casual” but work fairly consistently, say every weekend, is entirely different.

Before World War II, many more people in New Zealand, particularly males, worked in full-time, long-term employment and were seen as the breadwinners for their families.

During World War II, the male population was conscripted and women entered the workforce in much larger numbers. This was one of the biggest changes in the history of employment.

At this time the union secretary had the ability to decide in limited industries whether part-time workers could be engaged through the issuing of part-time workers’ permits. That practice has long since vanished.

The world has changed significantly in recent decades and work patterns are becoming increasingly flexible with technological advances.

Uber is a case in point. Uber says that its drivers are independent contractors who benefit from absolute flexibility in their hours and the jobs they take.

The Uber business model is characteristic of the “gig economy” in which individuals use digital platforms to access task-oriented work. This is perhaps the most extreme change to how people work in many years.

The changing nature of work raises questions as to whether more flexible work patterns can fit into traditional employment arrangements. The benefits of flexible working must be balanced against the reduced rights of contractors and casuals.

It is not only New Zealand that is grappling with this problem. Courts in the United Kingdom and France recently made rulings that Uber drivers were not independent contractors, but rather had varying degrees of employment rights.

The UK’s Employment Appeal Tribunal considered Uber drivers to be “workers” and entitled to minimum wage, holiday and sick pay, but not the full scope of permanent employment rights.

New Zealand’s Labour-led Government has indicated that, in light of changing work patterns, it may consider introducing a middle-ground category of “dependent contractor” which will incur some employment rights.

However, there is a potential that an additional employment category between independent contractors and employees will create further ambiguity around where workers with flexible work patterns fall and what they are entitled to.

The cases from the hotel industry and those about Uber drivers highlight the confusion around how flexible work arrangements fit into the employment framework.

The wider changes proposed by the Government, such as Fair Pay Agreements, seem to increase certainty for those providing labour, but will most likely be at the cost of flexibility.

If media reports are correct, Fair Pay Agreements may result in decisions on pay by third parties over whom the affected persons have little or no control.

Protecting the vulnerable is important but making the law too prescriptive may prove unpopular in these times of continual change and increasingly flexibility. Time will tell.

Peter Cullen works for both employers and employees and has built upon his earlier experience gained as an industrial advocate. In 1994 Peter established his own firm, Cullen-The Employment Law Firm. Peter convened the Wellington District Law Society Employment Law Committee from its inception until 2004. He is a regular speaker and commentator to the news media on industrial law issues. Peter has represented clients before the various employment institutions including the Court of Appeal. He uses his legal skills to impart clients with helpful advice upon which to base their decisions. His strengths lie in his in-depth knowledge of New Zealand employment law and his abilities as an advocate. Contact Peter at peter@cullenlaw.co.nz.You can also connect with Cullen Law via LinkedIn